Bashneft aims at Indian shelf

Jul 07, 2011

Vedomosti

Alisa Fialko

Source: Itar Tass

Bashneft can
enter the Indian shelf if the company succeeds in selling its 25% stake in ONGC,
said Mikhail Shamolin, President of AFK Sistema, which controls Bashneft. The projects
are under development. Neither Shamolin, nor Bashneft spokesman disclosed the deadlines
for these decisions.

It hasn’t
been disclosed which oil fields are considered, either. However, the company is
ready to claim both the minority and the majority stake in this project, Shamolin
says - it will depend on the project’s economy. Now Bashneft aims to increase its
resource base and considers all possible acquisitions including those overseas,
he added.

Just a couple
of years ago, Bashneft was a modest regional company. But its current plans are
no surprise for analysts. After AFK Sistema became its principal owner, the
company has experienced a rapid growth, says Denis Borisov, analyst of the Bank
of Moscow. Since then, its production has increased by more than 17% to 14.1
million tons of oil per year and its market capitalization increased by more
than 9 times to $ 10.7 billion. The company received licenses for large
deposits (Trebs and Titov) beating all the giants of the Russian oil
production.

However,
the shelf project Bashneft can participate in is unlikely to be too ambitious, Borisov
says. After all, the company needs money for the development of the Trebs and
Titov oilfields, whereas the offshore oil projects are costly. The exploration stage
alone will require a minimum of $ 200 million. Besides, Bashneft has no
experience of shelf mining or overseas operations in general. So, at best it
can get a minority stake in a consortium with major oil companies, the expert says.
In this case, much will depend on the talks with ONGC, he adds.

Russian companies have already
failed once on the Indian shelf. A year ago Gazprom admitted to failing this
attempt. The company spent 10 years for exploration in the Bay of Bengal but
all three wells turned out to be dry.